Indian automobile sector ushers in new FY on positive note

The Indian automobile sector is ushering in the new financial year on a positive note. Sales across all major categories registered growth in April compared to the same month a year earlier.

Maruti Suzuki India reported nine per cent growth. The company is a subsidiary of Japan's Suzuki Motor and it sells one out of every two cars in India.

As for Hyundai Motor India, the country's second largest carmaker, sales were up 3.5 per cent.

Shinzo Nakanishi, managing director, CEO, Maruti Suzuki Ltd, said: "Since last December, the government has announced several stimulative measures, including excise duty cut, which has definitely helped us to survive in this auto industry."

A four per cent reduction in excise duty was one of the measures taken to help revive India's slowing economy and it has had the effect of boosting consumer spending by making things cheaper.

Growth in the auto sector for the month of April was also driven by new launches. Last year, Maruti Suzuki India launched A-Star, a car manufactured only in India. It helped exports surpass the company's previous record set in March 2004.

Another model, Dzire was launched in March. It helped Maruti to double its sales in the A3 segment.

People are also making a bee-line for two-wheelers. Honda Hero saw sales go up with the introduction of two new models.

Hiroshi Nakagawa, MD, Toyota Kirloskar Motor, said: "I strongly believe Indian economy is fundamentally very strong. So it's time to enjoy the growth."

However, analysts warn that it does not indicate a revival in consumer demand. The growth is relative to a low-sales base seen in April 2008. When compared to March this year, the sale of passenger cars and commercial vehicles in April have actually fallen by 20 per cent.

In addition, problems such as lack of funds and banks' unwillingness to provide loans continue to haunt the Indian automobile industry.

The sector has its wish-list ready for the new government that will assume office soon. Firstly, it wants the tax sops given to the industry to continue.

And with the Left parties no longer blocking economic reforms, the auto industry wants immediate approval of foreign investment in the country up to 100 per cent, with no minimum investment criteria.